Microsoft fined $730 million over browser choice

The European Union imposed a sanction on Microsoft after it failed to comply with a settlement where it promised to present Windows users with easier access to other Web browsers.

Viginia Mayo/AP

European Commissioner for Competition Joaquin Almunia speaks during a news conference at EU headquarters in Brussels on Wednesday. The European Union Commission has fined Microsoft £561 million ($733 million) for breaking the terms of an earlier agreement to offer users a choice of internet browser.

Microsoft and EU made a settlement in 2009 after the commission started investigating allegations that the company abused its dominant position in desktop software by tying Internet Explorer to Windows, EU commissioner Joaqúin Almunia says in a statement delivered in a news conference Wednesday.

Microsoft agreed to give Windows users the chance to install other Web browsers at the outset, by displaying a “browser choice screen” listing other browsers. However, Mr. Almunia, the vice president of the European Commission for Competition, says Microsoft did not live up to its promise. While Microsoft did make the choice screen available in March 2010, the company did not include it in a Windows 7 service pack software update from May 2011 to July 2012.

“Following an in-depth investigation and taking into account Microsoft’s reply to our objections, today’s decision finds that Microsoft has indeed breached its legally binding commitments,” Almunia says. “Such a breach is of course very serious, irrespective of whether it was intentional or not, and it calls for a sanction.”

About 15.3 million users did not see the choice screen when they operated Windows, according to Almunia.

Microsoft took responsibility for the violation in to a statement released Wednesday.

“We take full responsibility for the technical error that caused this problem and have apologized for it. We provided the commission with a complete and candid assessment of the situation, and we have taken steps to strengthen our software development and other processes to help avoid this mistake — or anything similar — in the future.”

The number of people using Internet Explorer in Europe has dropped by more than half in the last few years. Global statistics website StatCounter estimates that 23.9 percent of Internet users in Europe browse with IE, compared to 49.1 percent in March 2009. A StatCounter press release in October 2010 suggests that the Microsoft choice screen could have played a role in the drop of IE users.

The sanction against Microsoft raises questions about how other multinational companies will fare against the European Commission. The most recent example is Google, who has been in talks with the European Commission for years over allegations about anti-competitive practices with its search engine.

Google offered in February to change some of its business practices, according to Reuters. Proposed changes include labeling its own services in search results to set them apart from other services and imposing more flexible guidelines for advertisers.

Reuters reported that Google ranks first in Internet searching in Europe, with an 82 percent market share, according to research firm comScore.

Bert Foer, president of the American Antitrust Institute, says that although the fine was not excessive (the commission can charge up to 10 percent of a company’s global annual revenue), it could warn similar companies to abide by antitrust rules.

“It’s hard to calibrate from the outside what a precise award should have been, but I don’t find this startling or excessive,” Mr. Foer says. “Hopefully it will send the message to multinational companies that in whatever jurisdiction they’re operating, they’ve got to abide by the constitutional laws.”

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"The overall message is that the Europeans do have substantial tools at their disposal for antitrust and that they're pretty serious about it," he added.